Nine Months Ago I Said Germany Would Leave the Euro... Finally the MSM is Starting to Catch On

Since November 16th 2011, I’ve been forecasting that when push comes to shove, Germany will opt to leave the Euro. At that time I wrote…

…everyone claims they want to support the EFSF… but no one wants to commit the money. Moreover, Germany’s constitution forbids the backing of Euro bonds… and the EFSF itself has failed to stage even a three billion Euro bond offering under] normal market conditions.

Again, the bailout game is ending. Under these conditions, I believe Germany and France will push to either:

1) Leave the EU

2) Draft legislation that allows countries to leave the Euro but remain in the EU

3) Propose kicking out the PIIGS from the Euro

Whichever one of these options Germany opts for, the Euro will collapse

~November 16 2011

Sure enough, soon after I wrote this, Germany began implementing measures to put a firewall around its financial system. I noted in this in February 2012, writing:

…Germany has put into place a contingency plan that would permit it to leave the Euro if it had to.

As a brief recap, this contingency plan consists of:

Legislation that would permit Germany to leave the Euro but remain a part of the EU

The revival of its Special Financial Market Stabilization Funds, or SoFFin for short, to which Germany has allocated 480€ billion Euros to in the case of a banking crisis (the fund will also permit German banks to dump their euro-zone government bonds if needed).

So Germany is ready to bail if it needs to. Meanwhile, on the other side of EU equation, Spain and Italy must be watching what’s happening in Greece and asking themselves whether they want to go through this whole process of negotiating for bailouts via austerity measures.

~February 21 2012

Now, nearly nine months after my initial forecast, this story is finally getting picked up in the mainstream media. The Economist has a fictitious cover story about Merkel pondering how to break up the Euro. And Der Spiegel notes:

Officially, though, Merkel's line is that she wants more Europe, not less. In the chancellor's bid to save the common currency, she is willing to go to the very limits of what is permissible under the German constitution. That was made clear by her support for the permanent euro rescue fund, the European Stability Mechanism (ESM), and her pet project, the fiscal pact. But Merkel still wants more. "We need a political union," she recently said on German public television station ARD. "That means we have to give up further competencies to Europe, step by step, in an ongoing process."

Talk of a Vote

But that will probably not work, given the limits of the German constitution, something that members of the opposition have been pointing out for some time. In the meantime, more and more people within the governing parties have been talking about holding a referendum in Germany on the European Union. Rainer Brüderle, the floor leader of the business-friendly Free Democrats, Merkel's junior coalition partner, said on Friday that there could come a point "when a referendum on Europe becomes necessary."

Horst Seehofer, head of the Christian Social Union (CSU), the Bavarian sister party to Merkel's Christian Democratic Union (CDU), has even called for several referendums. Finance Minister Wolfgang Schäuble has also talked about holding a national vote on the EU.

Such a vote could indeed be a way to get the much needed legitimacy for a transfer of national competences to Brussels. But how would it actually work in practice? SPIEGEL ONLINE presents an overview of some possibilities.

How exactly all of this will play is hard to say. The fact that we’ve seen hints of Germany leaving the Euro popping up in the mainstream media should be a BIG warning. Moreover, the Wall Street Journal recently noted that certain areas of Germany are once again accepting Deutsche Marks as legal tender.

Will Germany leave the Euro? I believe so. The country is already bordering on insolvency due to nearly €1 trillion in backdoor EU bailouts (pushing Germany’s Debt to GDP to 90%). Over 69% of Germans are worried about inflation. Angela Merkel is up for re-election next year (and has gained political points anytime she played hardball with Europe) and Germany has implemented steps to place a firewall around its financial system and passed legislation allowing it to leave the Euro if need be.

None of this adds up to Germany bailing out all of Europe. Merkel has said there will not be Eurobonds for as “long as [she] lives.” And Germany doesn’t have the €5 trillion needed to backstop the PIIGS banking deposits, let alone the deposits for all of the EU.

On that note, we’ve recently published a report showing investors how to prepare for the collapse of the EU. It’s called What Europe’s Collapse Means For You and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.

PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.

Comment viewing options

The history doesn't seem like an subject selection for Robert Zemeckis, who has excelled in genres that have provided masterpieces like Forrest Gump (1994) and Fling Away (2000). As the thin skin or coating provides a more darksome and denticulated come near in his directorial phraseology, Zemeckis executes with exactness. It's a pleasing essay from the manager who makes his get back to be animated exercise after a drawn out cord of movement-apprehension efforts. Assisting Washington's bravura watch friends with benefits online achievement is Oscar-nominee Don Cheadle, who teamed up with Denzel in the 90's classic thin skin or coating, The enemy in a Sky-colored Align (1995). As the intelligent-cracking counsellor, whose own touching obligations values may be pure in trade for incorporated and felonious release, Cheadle is a relieved nearness. In a comedic and near-sparkling achievement, John Gaffer steals Volitation from every operator including Washington in his brief, two-sight appearances.

Gaffer continues to present to view an effortless row, even in straitened thin skin or coating choices, and a reliance that makes him one of the enormous mark actors laboring today. It's a achievement that Oscar should consider on multiple levels. In a heartbreaking watch bridesmaids online move round, Kelly Reilly as the physic-addicted Nicole, provides an emotional epicenter and bourn that stands as one of Latins' enormous penmanship achievements. Reilly is sincerely marvelous.

When - and only when - the printing begins in earnest (best guess December 2012) will Germany return to the DM.

Its great living next to a hyper-inflationary economy so long as you have a solid currency of your own. You simply pop across the border and snap up assets for cents-on-the-dollar from people who are desperate for any currency but their own. After all, your own government can't ass-rape you so bad if you are holding "real" money, right? Check out "When Money Dies" by Adam Fergusson for the details.

Germany has every incentive to keep the ponzi going until maximum stress is reached - that way the pickings will be so much juicier. It also has the added benefit of keeping German exports competitive through the ongoing weakness of the failing Euro.

When the time is right she can neatly step aside into the safety of the new DM and reap the rewards.

Actually, I already said it on October 4th 1989 when the Wall came down, having a few beers with friends. I said "you know, Germany will leave the common European currency in 2012". My friends thought I was drunk and laughed at me. I, of course, knew better.

The US won't attack Iran until after the Nov elections..... (no matter who wins. the neo-con hit list is in play). Until then we''ll have to settle for making noise about Syria.

War is always the last resort of collapsing economies and failing empires, but it's doubtful that an expanded version of the war against terroristic Islam (what?!?! those countries also have major oil fileds - what a coincidence!) will revive the US's failing fortunes. In all likelihood all it'll do is hasten our national bankruptcy (Iraq and Afghanistan sure moved that date up and an expanded war in the ME will speed it even more).

No matter what, war is coming - foreign or domestic. Sadly the latter is far too likely as TPTB fight to hold onto power after destroying the US.

At least all tht military technology will come in handy repressing the domestic rebellion that will occur when the US populace faces the end of bread and circuses. Hungry and out of beer, the all too well-armed US (formerly) working class will not be too happy to find out they've been conned. The question is: WIll the US military and police serve tgheir corporate overlords or uphold their oaths to preserve and protect the Constitution? (in simpler terms - will THEY stand up for their own self-intersts or be ggod hired help to the richest .01%).

Yeah just about every 24 h now.
For those fairly new here it goes something like this:
- see Penix Crapital Research at the top of ZH
-say shit, not again, not more useless crap
- receive confirmation of such expectation in the post
- give it a 1 point rating as zero is not possible
- tell Graham to fuck off in the comments section.

think of Europes entire Parasite Club (bankers, politcians of local, national and international - EC, ECB, EU - Govt plus all their crony businesses attached from monopoly utilities, green Co's, accountants/consultants, service and goods suppliers and all the public servants) all facing their 1st crash diet in 2-3 decades

these obese spoilt brats are not going down without taking the productive economy with them (ie. anarchy, which is the real definition of Govt)

"it is well known that the bulk of Europe's sovereign gold is also contained deep under downtown Manhattan: we wish them all the best when they attempt to repatriate the physical when they need it, such as the day after the EUR finally collapses".

This is the other way round. First Nixon forbade repatriation on August 1971. Then europe had think through where all this was heading and concocted the EUR as a response to the situation, present and future.

This included expectations of future currency wars and great rounds of "competitive devaluations" in an environment that would make small currencies very, very fragile in view of huge waves of hot, speculative fiat looking for something to break for a quick profit. The CHF is already hiding under the EUR skirt, if this goes on we'll soon see other small currencies in some kind of trouble (the GBP's fate will also be very interesting). No financial pundit is currently ever thinking through (in the way of Bastiat) how this mess since 2008 would have looked like with 17 eu currencies all biting each other...

Ironically, the best way to get rid of the EUR would be the repatriation of the european gold, same as in 1971.

Fat chance. As long as the US Treasury/FED goes the fiat way and the USD is the global reserve currency (the two facts reinforce each other), I don't see how this "EUR collapse" could happen with an eurozone that is a net exporter, an ECB that values it's gold at market value and the European Fiscal Compact that is going to at least try to institutionalize nearly-balanced-budgets in the eurozone's future.

For all near-blind hate against all central banks that some here have, anybody looking seriously at the current situation should realize a few of those facts, that make btw the search for "understanding where the EURUSD is going" quite irrelevant, a mere short-term distraction. By now, we all have some proof that the ECB is really guided by the compromise between 17 national interests (yeah, call them mercantile, if you wish).

Parts of the gold markets are "getting it", eventually we'll talk here about "eurogold vs. usdgold", and more about "central banks FX reserves", etc.

And for all those that are expecting a "marriage of convenience" between the USD and the EUR - or even think this is a "grand plan": please remember East Asia's policies, expectations, demands (including SDRs), past currency manipulations and plans for the future. And how the current global trade flows function.

_-_-_-_

All I can think to add to what Ghordius wrote above (for now) is that the EUR is a supra-national currency, with no single nation in control of the issuance of currency (BIG difference between the ECB and the Fed, although it's clear the Fed is in collusion with the big banks).

Also, it uses the market price of gold to calculate it's reserves, with which it lends against. This gives it an enormous advantage over both a debt-based and a gold-redeemable currency.

This also has the effect of limiting the ability of any one Eurozone member from issuing unsustainable debt (Greece, Spain, et. al. are running up against this market limit right now).

This has the effect of in the long run, making the EUR the most stable of all transactional currencies in the world.

The USD could do the same, but to try and adopt the EUR model, it would create a price shock in gold (and the USD) that TPTB are clearly trying to avoid.

This IMO will result in the EUR becoming (at least in the West) the transactional currency of choice. Not a great store of value (unless you buy stable EU nation bonds, depending on the larger environment), but a superior medium of exchange than other currencies (owing to it's wide acceptance and greater stability).

In Arizona Obamacare is not mandatory. They fixed that problem before it even became an issue. The groups whose Medical Insurance will go up are those from out of state insurance companies. Given enough time the State based ones will push the out of state ones, well out of the state.

Not only that, but nine months ago Graham copied every other financial blog on the planet (and every ZeroHedge post) and wrote semi-literate blog posts which were 2 paragraphs long, included 90% quotes and ended with "Buy my lame newsletter" -- Now he's trying to make it look like he added something of value here.

Seriously, fuck off Graham. You're the shittiest contributor to ZeroHedge (with the exception of Mr. "I still carry an American passport, and lie about my success" Simon Black). Lightweight, junior-varsity posts which end with sales-pitches are what you're known for.

9 months ago you were ridiculed. And you're still being ridiculed.

The above post is a perfect example:

1) "I claimed Germany would leave the Euro before everyone." (No you didn't. The blogosphere has been absolutely filled with this idea).

2) Quotes from Speigel (as if this is the first time it has been discussed in German media -- Seriously, are you kidding me?)

3) Backpedaling: "It's difficult to see how this will play out... " Will they leave or won't they? (Wait... what happened to your thesis?)

4) "Protect yourself from Germany's impending Euro exit! Buy my newsletter!" (Ah.. So we're confident again now? Just in time for a sales pitch!)

And also, dear Graham, I note that you now no longer include specific dates in your ramblings. Just to remind you, though, the last time you did make a specific prediction it was that the Eurozone would completely collapse by July. But, in fairness, you didn't say which YEAR.

As another amusing aside, I excpect shortly to see the usual -1 against all posts like this and Popo's. Sheeeeesh....